Quality education has become one of the most expensive yet compulsory things to acquire in our life. Though education is costly nowadays, we can’t afford to ignore the same either for ourselves or our kids. According to the studies, schooling charges are increasing by 15% per year. If we calculate in the same way, the course which cost Rs. 2 lakhs today, it will cost around Rs. 25 lakhs 15 years. So when we do savings or investment to bear the educational expense of our children, we should be prepared for the cost we need to bear after 15 years. Because of this faster hike in the education sector, many a time our savings become insufficient to bear the education expenses.
To the relief of many average income people, acquiring a professional degree from a reputed institution is now within the reach because of the financial tool called –Education Loan. An education loan helps the students and parents to bear the expenses of pursuing a higher educational qualification. Let’s learn what an Education Loan is and how it works.
What is an Education Loan?
An education loan is an unsecured loan which is availed to pursue professional courses. Most of the Indian banks provide education loans. Generally, education loans are offered to pursue professional courses like medicine, engineering, management etc. One can avail an education loan to study within the country or abroad.
Benefits of Education Loan
The education loan comes with a number of benefits. Here are the benefits you can enjoy by availing an education loan for yourself or your children.
A) Make Education Affordable
An education loan helps the students and parents to cope up with the steep cost of quality education. Self-financing the cost of professional education is beyond the reach of most of us. An education loan becomes the ray of hope and makes the professional degree affordable for us.
B) Tax Benefit
An education loan attracts tax benefits. Under section 80E, the interest paid on education loan is tax-free. One can claim tax benefits until 8 years.
c) Larger Coverage
An education loan does not only cover the course fee, but it also covers expenses like hostel fee, library fee, exam fee, books, lab fee etc. An education loan is an end to end financial solution of pursuing your professional degree.
D) Protects Savings
An education loan protects the savings of the parents or the students. One can fulfill other needs using the savings while an education loan is enough to take care of the educational expenses.
E) Moratorium Period
An education loan gives a moratorium period or a holiday period when the borrower does not need to pay EMI of the loan. This period starts after the completion of the course. The moratorium period ranges from 6 months to 1 year which gives the borrower enough time to find a job and become financially stable to start paying the EMIs.
F) Credit History
An education loan is much helpful to build credit history of borrower and co-borrower (if applicable). Building up a good credit score while being a student helps you to get bigger and better loans in coming days.
The Eligibility Criteria of Education Loan
In order to avail an education loan, the applicant must meet the given criteria-
- An education loan can be applied by both citizens and NRI. In the case of NRIs, a valid passport is required.
- The minimum age of the applicant or co-applicant must be 18 years.
- The applicant need to have secured certain marks during SSC, HSC, and graduation
- Some lenders may require the applicant to clear the certain national level entrance examination
- The applicant or the co-applicant (parents) must have a regular source of income.
- The confirmed admission letter from a recognized college/education institution is a must
Documents Required for an Education Loan
- Two passport size photograph
- Age proof
- Identity proof
- Residence proof
- Bank account statement for the past 6 months
- Papers validating any scholarships the applicant has qualified for.
- Admission confirmation letter from the educational institution.
- The expense of the course
- Mark sheet of test
- Foreign exchange permit copy (if admission has taken abroad)
The Last Lines
Education loan helps a person to bridge the burden of carrying the expensive education cost. An education loan generally takes a week or two to get sanctioned. The disbursement of the loan happens in small instalments, directly to the educational institute. The loan amount of an education loan is quite high. One can even increase the amount by adding collateral to the loan. The highest amount one can avail to study in India is INR 10 lakhs and for abroad it is INR 20 lakhs. So, apply for an education loan today and open the door of opportunities in the future.